Cooperative electricity consumption scheduling and pricing for future residential smart grid

Abstract

Smart Grid, with its advanced two-way communication mechanism, has been envisioned to improve efficiency and stability of grid operation significantly. One of the key features of smart grid is its flexible demand response mechanism based on which the energy consumers are able to schedule their energy consumptions wisely over time to trade off between its utility and the associated energy-acquisition cost. The key ingredient in consumers' demand response is the electricity price, which is normally determined and controlled by the electricity-providers or retailer. As a result, the consumers usually suffer from a potential loss of welfare due to this “unfair” pricing scheme dominated by the providers. Motivated by this consideration, in this paper we propose a cooperative energy scheduling and pricing scheme, which allows the consumers to jointly optimize its electricity consumption and his preferred payment, based on the Nash Bargaining Solution (NBS) from the microeconomics theory. Our numerical results show that the proposed scheme can effectively improve both consumers' net-welfare and provider's net-profit compared to the non-cooperative case.